New Employees Confused Setting Up 401(k)

“I personally would try to make sure your next job has a 401k or 403b or some sort of retirement plan otherwise you’ll be limited to what you’re already doing with IRA. Most employers offer some sort of retirement plan even if they don’t offer some sort of match. In the meantime I would just try to save as much as you can in a HYSA or money market mutual fund in a brokerage account to help get through school and finish your degree. Based on how much you’re able to save up will determine how much”

“with you 401k's are they employer match? You should be putting aside as much as you can to take advantage of the match. Do not take your money out from your retirement accounts. You need to constantly add to those first as you're paying your future self. Look, everyone says "Stock market is big wins". But that's rare, think about the wealthiest investor from stocks. Warren Buffet, even he won't reccommend picking random stocks. Focus on the Credit Cards, and budgeting y”

“Thank you! [re: Turning 50 next year, multiple employers, 150k+ income. Can I use an employers post-tax option for my 'catch-up' and still do my usual backdoor Roth contribution? Thank you in advance]”

“I’ve never worked for a place that has one before. It’s 100% employer funded, so I don’t have to contribute (according to them, it goes up between 10-15% per year). You are fully vested after 5 years. They do have a 401k option, but there is no employee match. They also have an HSA plan, the max contribution is $4300/year ($500 from the employer and the rest employee). I’m 36 years old, single no kids, and have about $126k in retirement ($90k in a 401k and the rest in a Roth IRA, which is fully”

“The $17k retirement withdrawal is the decision I'd hold off on until you've worked through the monthly cash flow. You've already had one 401k withdrawal that may leave you with an additional tax bill, and another one could give you temporary relief while leaving the underlying problem intact..One detail in your numbers matters: $2,900 every two weeks means $5,800 in most months, not $6,283 every month. Your listed bills total $4,605, so you're starting with only $1,195 in a norma”

“Thanks for your input. I would argue that it could be combined with the mega backdoor. It's treated as a pre-tax employer contribution plus a taxable Roth conversion reported on Form 1099-R, per item L-9 in Notice 2024-2 . This can adversely affect the QBI deduction. I'm assuming this is due to reducing the W-2 wages reported? [re: Mega backdoor Roth 401k limit when you have a separate W2 day job]”

“If I max out my pre-tax trad 401k why can't I also max out my pre-tax trad IRA? Is there some limit i don't know about. submitted by /u/HaleyN1 [link] [comments]”

“You could also contribute a Roth amount as the employer. [re: Mega backdoor Roth 401k limit when you have a separate W2 day job]”

“I’ve pretty much always contributed to Roth. Anything I have in traditional would be just my employer’s match contributions, which if I understand correctly goes in as traditional even if my 401K contributions are Roth. I was thinking about putting some in traditional but want to see if I am correct in how I think this would work in retirement: I believe you can make up to a certain amount and still owe $0 in income tax ($34K for married over 65 currently). So during retirement could I withdraw”

“No I just like contributing to Roth since I make so much I just bite the tax bullet now. [re: Mega backdoor Roth 401k limit when you have a separate W2 day job]”

“A work 401k plan adds a fee of ".25% of account assets" for all funds in the plan. That's on top of the individual investments' expense ratios (low fee Vanguard total market equity and bond funds, so those fees are low). Would you continue to max out the tax-advantaged 401k despite this add-on fee, or contribute up to the employer match and then fund other IRAs before returning to fund 401k? The question ultimately boils down to whether that .25% would be enough to change the s”

“We’re planning to retire at 44, and while we do have some in taxable brokerage, my husband and I both (currently 38) max both pre-tax and after-tax contributions for our 401k before contributing any additional to taxable. https://www.madfientist.com/how-to-access-retirement-funds-early/ [re: Can someone dumb it down maxing 401k over brokerage?]”

“There are ways to access even the standard 401k money early. Look up SEPP for an example. Roth IRAs specifically have the feature of you being able to pull out contributions (but not growth) at any time without penalty. That's one of the reasons it's so heavily recommended as the first stop after getting your match, if any. [re: Can someone dumb it down maxing 401k over brokerage?]”

“This is a great perspective. I would like to add also that income put towards a tax advantaged account such as a 401k result in a higher balance at the end than those put directly in a brokerage. If it is a pre-tax account such as a Traditional 401k or Traditional IRA then it's because the same amount of income results in more money being invested. If it's a post-tax account such as a Roth 401k or Roth IRA then it's because the gains aren't taxed on distribution. In both cases, t”

“In your early years you are likely in the lowest tax bracket until you retire. 401K allows Roth contributions (grow and withdraw tax free) that a brokerage does not. So you pay a penalty for any brokerage stock you aren't selling. You can also draw on your 401k at 59.5, so it depends on how early you plan to retire. A brokerage is great for flexible cash, but ensuring a well funded retirement should be your goal before a brokerage. Again, you are super young and most people who can retire ea”

“Hey everyone, I am an independent contractor (1099) (28 years old) and I make about $120k a year. In my current position I do not have a 401k option and I only have a self-managed ROTH IRA. I currently have the entire IRA in a TDF and I max it out every year. I also have a taxable brokerage account with 60% in VT and an emergency fund in money markets with 10 months of expenses. At this point my taxable account is outpacing my IRA by about 5% YOY. Since I don’t have the added tax haven of a 401k”

“Im 25 and make ~90k a year before tax. I'm putting around 12k a year into my 401k currently, but I'm planning on increasing it slowly and hopefully maxing it out as my salary increases and as I pay off my student loans. Im expecting a steady progression in my income, and probably reaching around 200k a year in 10 years. Current my split between traditional and roth 401k is 30% and 70%. Im not sure what the best way to split it is. Would it be better to do 100% roth because im expecting m”

“That link's the right starting point, you're already doing the hard part by saving 50% at 21 After maxing the Roth, if your job offers a 401k with a match, grab that free money next before you touch a taxable brokerage, no point leaving it on the table [re: Where should I be saving? Retirement or normal brokerage account?]”

“Just did my 2025 taxes. Wasn’t planning to max my wife’s solo 401k this year, but by the time the income is in the phase outs for child tax credit, dependent care credit, Qualified Business Income etc then the marginal rate gets high. just put $25k in the software and it decreased my tax liability by $9k. Feel real good about getting that out later at less than 36% taxes. anyway that’s all. Just a shout out to double checking marginal rate if you’re in a spot to do anything about it with that la”

“Don’t think I mentioned porting a Roth 401k to a trad 401k. They are separate accounts. You can contribute to either one of them, one is after tax and one is pretax. This is being done before we see our take home paychecks [re: Is it better to plop 60k into a Roth IRA and never touch it again or max it out every year?]”

“Important caveat is the 401k should be split between main 401k and catch up. At my company they are two separate buckets. [re: Starting Over from Scratch at 56 - Need Advice on Retirement, Saving for a Home, and budgeting]”

“Saving for a house is a different ball of wax, but for most instances if the savings is for retirement it should be in a retirement account. It's stupid to not take advantage of no taxes when we're talking decades if growth. [re: Should I increase my 401(k) contribution instead of putting my “leftover” money each month into my taxable brokerage account? 26yo]”

“Right now, my employer matches 5% of 401(k) contributions (they do not offer a Roth 401k only standard), so I have been putting 5% in each month. Invested in large Vanguard and Fidelity ETFs and a 2070 target fund. Ever since I started working full time, my dad told my siblings and I to max out our employer 401k match and invest the rest, so I did. Around a year ago, I got a new job and my salary grew ~15% (and I moved to a lower COL area) so I maxed my Roth IRA for 2026 a few months ago. Now I”

“Would that be 15% of your take home pay after taxes or 15% total? [re: 28. Am I on the right track]”

“Hello! Looking for some guidance on whether I should contribute to my Roth IRA or a traditional one. 24m, married, $200k HHI. Currently expect to go to single income and reduce to $125k HHI in ~2 years with a kid. I understand that in general, it can be recommended to diversify your tax burden. My 401k is traditional, and I currently have ~$30k in a Roth IRA. However, being that our HHI is likely to reduce dramatically in a couple years, is it more reasonable to go all traditional? Or is that ir”

“Oh, be sure to contribute the max to Roth IRA, since you’ll potentially have a high fixed taxable income in retirement, for some flexibility in income sources. Also, you might be able to roll your old 401(k) into your 457(b), if you want to consolidate to one institution and like the investment options, but look up plan details (there are some things to consider, like see this Bogleheads discussion ). I’d only roll into an IRA if you don’t think you’ll someday need to do backdoor Roth contributi”

“Hi there, I'm new to retirement planning. Early 20's and self employed. I have a traditional 401(k), Roth 401(k), and a taxable brokerage. I'm looking for feedback as far as maintaining good diversity and stability. Traditional 401(K): - TDF: 100% Roth 401(k) - VTI: 70% - AVUV: 20% - VXUS: 10% Taxable brokerage: - VOO: 100% My questions: - Should I hold any other positions in the traditional account or just allow the TDF to do its thing? I was thinking of adding bonds/large cap ETFS,”

“I 33M make around 170k and the salary cut off for contributing to a Roth IRA is around 150k for 2026, so I have been under the impression I am ineligible. However, I just stumbled on that the salary cut off is not totally accurate, and eligibility requirements are actually based on MAGI. I max my pre-tax 401k which reduces my taxable income, and I also have 2 rental properties which will further reduce my tax bill. In 2025 I made 150k but due to all those deductions, my MAGI was closer to 120k.”

“I (27M) recently accepted a job offer that pays $100K and offers an employee sponsored defined benefit pension plan and 457b plan. My previous job paid $115K and had a traditional 401k with 4% match and ESPP. I contributed around 15% to 401k and 15% to ESPP and maxed my Roth IRA for the year. My question is how should I change my plan around saving/investing for retirement? I just rebuilt my HYSA back to 6 months of expenses after making a stupid mistake of trying to daytrade for extra income, a”

“401ks can be either the Traditional and Roth variety. IRAs can also be Traditional or Roth. [re: Took out money from 401k and stupidly put into CD - I’m learning]”

“hi pf! what does 25% of maximum compensation allude to regarding the limit on employer contributions for solo 401k? im self-employed but structured as an scorp and paying myself as W-2. the employee contributions are already maxed out as per yearly limits, however, i want to take more advantage of employer contributions. does the maximum compensation allude to the gross amount of W-2 income i pay myself? like if my gross W-2 income is 50k, i can contribute 25% of that as an employer? or is it my”

“How do I check? It’s a Rocket Mortgage 401k plan and if I’m not mistaken they buy Vanguard shares? Again I may have no idea what I’m saying here [re: Is this good growth for a 401k or is it just effects of inflation?]”

“I'm stupid. Does the fact that OP is in the 22% fed tax rate mean that it makes sense to go roth 401k because it's a low rate (relatively)? I thought the advice was to contribute to roth 401k only if you think your tax rate will be higher when you're retired than what it is now. [re: Contribute More to 401k After Raise?]”

“You should rollover to your current 401k. And the term is rollover, not convert. Gotta know the right terms or it can cause a major tax headache. Rollovers are not taxable events. You can rollover to a Traditional IRA instead, if you like. Traditional 401k => Traditional IRA. Roth 401k => Roth IRA. But keep in mind your income. If you make over $150k now or plan to at some point, you don't want any money in any Traditional IRAs. This allows you to do the backdoor Roth IRA without issue”

“if you’re already maxing the Roth IRA and HSA, the next logical step is to bump the 401(k) to the low‑to‑mid‑10% range. that will push most of the raise into pre‑tax and keep you below the 22% bracket until the summer. just keep that extra cash in a six‑month liquid buffer; it pays for emergencies and gives you a cushion if the car loan or any maintenance pops up. once you’re past the 401(k) max you can plow the remainder into cash or a taxable brokerage for short‑term goals. and if you have tha”

“You can take your contributions out at any time. You would have 60 days to put it back in. Otherwise, putting it back in would count as a new contribution subject to the annual limit. What's the objective here? Do you need the cash? [re: Can I withdraw money from Roth IRA that wasn’t invested and use it for the following year?]”

“I recently received a raise that brings me from about $70,000 to $82,160 before bonuses and overtime. That’s about $6850/mo. I’m paid biweekly, so most months only have 2 paychecks. I’m a 24 year old mechanical engineer in north Louisiana for anyone wondering. Also NO student loan debt :) My issue? I CAN afford to live on my old salary. Granted, I bought a car this year, making it a little harder to save money. This raise puts me into the next tax bracket. I find the idea of working for 68% of m”

“But if OP is deferring all of their earned income to their Trad solo-401k, they won't have any earned income for the Roth IRA contribution. [re: Overfunded Roth IRA Because of Solo 401k?]”

“If OP has an option to make Roth- solo-401k contributions they could contribute the $21732 to their Roth-401k and still be able to make the $7k of Roth IRA contributions. [re: Overfunded Roth IRA Because of Solo 401k?]”

“I would go pretax for your contribution and Roth for the catch up. [re: Should I prioritize Roth conversions or Roth contributions?]”

“Because my employers contribute to pensions rather than matching 401k, I chose to give to roth rather than 401k for a long time (until I made an income when i decided to contribute to both). [re: Can I stop contributing to my retirement?]”

“Good afternoon, This year I’ll pull in 175k pretax with a new company W2 in aviation as a pilot, last year it was 60k at another company. I plan to max out my 401K this year, but is there anything else I can really do other than that. To reduce my taxable income? I’m all new to this and would love some advice. Thanks. submitted by /u/Jumpy-Discussion9689 [link] [comments]”

“If OP gets the 6% match by putting in 6%, the math is 26000 + 1560 (match amount) - 1248 (80% of match “lost” due to being 20% vested) - 834 (taxes) = $25478 in OP’s pocket. You never get less than your base salary from being partially vested because vesting only applies to the employer contributed amount. [re: Internship offers 401(k) match. Unsure if to take it.]”

“Hi all, For 2025 I contributed to a solo 401k funded from a side business I do with $23,500 in employer and $46,500 in profit sharing contributions. I also have a w2 employer where i contributed $23250 to the employer plan, and they matched at $29,750. I had thought the employer plan had separate limits and was a 401A but I just found out it is a 403B which to my knowledge shares the 70k contribution limits with the SE 401k and I would be overfunded by about 53k. I have an extension filed for 20”

“More as a warning to other, just learned my lesson. I had set up Roth 401k contributions percentage so would land the year at exactly the $8k for the catchup for those over 50. All while maxing out the traditional 401K also. Well now my full withholding is switched to Roth because the system just counted the total and switched to Roth only after YTD total hit $24.5k. Therefore, I have over contributed to Roth and missed tax savings. submitted by /u/FirebirdRed5 [link] [comments”

“Hey OP, keep the Roth 401(k) roll‑over and just crank the 457b up like it’s a second 401(k). The pension is basically free extra but you still only own the employer part if you stay 10 years. If you chance it, treat it like a bonus—if you leave early you still keep your payments into the 457 and your Roth. Work your partial 3.5% into the pension while you save the rest in the 457, so you’re never “behind” and you’re prepping for the worst that a pension might not survive. Stay critical of any pe”

“Compounding has EVERYTHING to do with time and whether you should do Traditional or Roth. A one-year maxed 401k contribution of $24,500 over 36 years (basically the start of a college graduate's career, so yes, this is an extreme case), can grow to $1 million at 7% average growth and $2.5 million at 10% average growth. That's just ONE year's contribution...there are a bunch after that. Won't grow nearly as fast, of course... but add them all up, those are some healthy balances. T”

“I recommend to young people every time you get promoted or a big pay jump increase your 401k saving contribution by a % as you will never miss the money. In this case, I would do it every raise due to age and accept that your real purchasing power is decreasing every year as your raise really goes to savings. [re: 44M, married, NJ, started investing during COVID. How am I doing financially?]”

“On a related note, I believe QBI deductions are reduced by traditional 401k contributions (like the kind OP is making), but not 401k Roth contributions. Curious how big a factor that should be for people like OP when deciding between Roth and traditional contributions. [re: How can my Solo 401(k) reduce my tax burden to the maximum extent?]”

“I'd retire now. Then plan to convert up to $2M of the 401k to Roth, filling up to the 22% tax bracket each year. Don't bother converting all of it unless you're planning to leave it as a legacy for your kids. While working, go ahead and max out the regular 401k; catch up contributions now have to go to Roth regardless. [re: How to maximize Roth Conversion of 2-3M after age 60?]”

“the 8% goes back into your 401k not to some fee black hole so you're paying yourself but the real killer is missing out on that 12% growth while you slowly pay it back [re: 401k loan vs bank loan for a vehicle]”

“Have you looked into SEPP distributions? [re: Should I keep maxxing my 401k or change things up?]”

“I thought my order of investments would be Employer Match > HSA > Roth IRA > 403b/Roth 403b > Taxable. However, the wiki states the following: A reasonable rule-of-thumb is to consider investing in a taxable account if the product of the extra costs and the number of years you will stay in the plan exceeds one and a half times your combined federal and state tax rates on qualified dividends over your working career. https://www.bogleheads.org/wiki/401%28k%29 The extra costs (403b adm”

“You need to start making substantial contributions to the 403(b), and make a commitment to increase that contribution each year. I think this is what I'm trying to figure out. I'm not looking to invest in anything. I'm in a period where I can save a larger portion of my paycheck and just want to put that towards retirement. Another poster said something about my employer tripling my contributions, so I'm trying to find out how to do that. [re: Looking for some guidance on the bas”

“Gotcha, just making sure OP knew not to contribute $54k on top of what they have already done. [re: How can my Solo 401(k) reduce my tax burden to the maximum extent?]”

“For (1) are you including the deferrals too? Because I'm getting the employER cap at $28,810. [re: How can my Solo 401(k) reduce my tax burden to the maximum extent?]”

“Thank you so much for your reply. I also love how simple this calculator is. Very, very helpful. [re: How can my Solo 401(k) reduce my tax burden to the maximum extent?]”

“Solo 401(k) employee deferrals and the employer contribution will only reduce income tax, not self-employment taxes--this is what most self employed folks don't understand. SE taxes on $155k business profit is roughly $21,901, income tax is on top of this. With Solo 401(k) contributions, you'll help offset some of the income tax due, but the SE tax will still be owed and will not be reduced. Your QBI deduction will also be reduced due to the Solo 401(k) contributions. [re: How can my Sol”

“Roth accounts are also not subject to RMD, which can really help control income & thus tax bill in retirement (especially in that inheritance scenario) [re: Should I keep maxxing my 401k or change things up?]”